Many food and beverage macro-trends have drastically evolved following the impact of COVID-19, which has been felt in almost every aspect of life. From where consumers eat and work, to how they shop, the pandemic has brought about a wave of change, and the dairy industry has been no exception.
The industry has faced challenges, from disruption to supply chains, distribution channels and global markets, to dampened purchasing power in the face of a recessionary environment. However, the resilience of the industry and changes in consumer lifestyles and needs provide opportunities for industry players to rise to the challenge for growth in a post-pandemic era.
Accelerated e-commerce adoption
The growth in the adoption of e-commerce after 2020 signalled changes in the online retail landscape for dairy, as capabilities and infrastructure around deliveries strengthened. In Southeast Asia, partnerships between dairy manufacturers and online shopping marketplaces such as Lazada, Shopee and Tokopedia crucial for brands to expand their presence in local markets. COVID-19 brought about shifts in consumer lifestyles, fuelling demand for convenience and safety as global markets grappled with nationwide lockdowns and restrictions. Convenience being a key driver has led subscription models to grow in popularity. Brownes Dairy in Australia introduced its home delivery service, Milko, for consumers looking for convenient and regular access to farm fresh milk.
Renewed focus on functional
Health and wellness trends have become key focus areas to cater to consumers looking for additional benefits from their regular food choices. We have seen that COVID-19 has significantly heightened the emphasis on preventative health, with growing interest around foods with functional nutrients. Consumers are also searching for healthier and more natural food options to keep health issues at bay.
Apart from added nutritional benefits, dairy products have also proven to be a popular food choice for functional products claiming beauty benefits. For example, Vinamilk’s ProBeauty yoghurt range in Vietnam offers added collagen for ‘firmer’ and ‘more elastic’ skin. Functional nutrition is a feature that manufacturers can offer to excite consumers and spark interest in dairy products to drive value growth for the industry.
‘Natural’ and ‘clean label’ are becoming more important
The rise of plant-based dairy alternatives is primarily being driven by some consumers perceiving them as a healthier option. Despite ‘healthiness’ being one of the primary drivers of growth of plant-based dairy alternatives, consumers still value the nutritional superiority of dairy, and seek ‘clean label’ products.
Source: Euromonitor International’s Voice of the Consumer: Health and Nutrition 2020 n:9011, 2021 n:8767
According to Euromonitor International’s Health and Nutrition survey, around 20% of global consumers preferred ‘clean label’ packaged food in 2021. The dairy industry should focus on educating consumers on its superior nutritional profile and its ‘clean label’ nature to win over consumers who are driven by health credentials. New developments include the Remarkable Milk Company in Australia, which launched O3 milk with no additives and naturally occurring omega 3 for added nutritional benefits, achieved by designing highly beneficial pasture for the cows. In addition, the majority of consumers occupy a middle-ground, choosing both plant-based and animal-based proteins, leaving room to create blends or partnership offerings.
Finding excitement through food
There is an opportunity for the dairy industry to drive growth by enhancing the consumption experience, and to cater to new eating occasions by creating novel sensory experiences.
Following the pandemic and restrictions on lifestyles, consumers tend to seek moments of escape, indulgence and luxury in their food choices. Several interesting flavours have been seen in response to this trend, including within yoghurt, such as bubble gum and salted caramel by Brownes Dairy in Western Australia, and within flavoured milk, with Banoffee Banana Caramel Fresh Flavoured Milk by Lewis Road Creamery in New Zealand.
The exciting part of this trend is that the possibilities are seemingly endless on how flavours and formats can be transformed to bring new experiences to consumers.
Consumers want to know where their food comes from
Consumers are more conscious about supporting local suppliers and producers, as they want to reduce supply chain dependency and support local economies. They are drawn to products with local origin, as these are positively associated with authenticity and quality, as well as transparency in terms of the journey of the food they are consuming.
Legal reforms are also fuelling this trend, as governments further explore mandating product origin statements. The EU is discussing plans to make country of origin labelling mandatory for dairy products by 2022. Similarly, Chile amended its regulations, requiring dairy products include country of origin indication in 2020. This will help local and independent manufacturers and producers build relationships with consumers by placing an emphasis on traceability, provenance, sustainable production practices and animal welfare as a way to create value for both producers and consumers.
NZMP, which stands for New Zealand Milk Products, is the ingredients and solutions brand of dairy co-operative, Fonterra. Perspective is their monthly publication providing commentary, trends and data from leading industry experts.
For further insight on trends and innovations in dairy, please read our article: Five Key Trends Shaping Dairy Products and Alternatives.